A trader buys two July futures contracts on orange juice. Each contract is for the delivery of 15,000 pounds. The current futures price is 160 cents per pound, the initial margin is $6,000 per contract, and the maintenance margin is $4,500 per contract.

1. What price change would lead to a margin call?

2. Under what circumstances could $2,000 be withdrawn from the margin account?

Answer rating: 100% (QA)

Margin is the amount of money that an investor must deposit with his or her broker as a guarantee that he or she can cover any losses on the futures c... View the full answer